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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (74806)	3/6/2007 3:07:08 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

Liquidity is not always the answer in normal markets, probably never the answer. However, these markets are very far from normal, and are liquidity driven. 2/27, 3 pm is the kind of BK that I expect once liquidity evaporates, only a bigger down in price -g- Say, limit down in 1 minute, DOW halted, another limit down in 1 minute after DOW re-opens, halted for the day -g- Computer-driven markets can be very fast -g- The main reason is - this is not a free market. By manipulating stock indices higher through futures, the Fed has destroyed all the bears, and thus all natural supports this market could have. The only support is from the Fed and minions. Once the market overpowers that (it usually does, or so history tells us), there will be no upticks. Hey, I would not dare to short this pig. -g- The ongoing manipulation is coming from derivatives - index futures. Thus, it will be the derivative market that overpowers the Fed. The Fed seems to think that leverage is the answer to managing markets, but as the leveraged derivative markets grow exponentially in size (they have been), the point at which they can no longer be managed will come.

To: William H Huebl who wrote (74806)	3/6/2007 3:48:04 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

The futures manipulation by the Fed has induced a whole new financial industry. $1 Trillion in hedge fund money plays the market. 1/3 of this money is associated with LTCM strategy of selling options with delta-hedging, effectively shorting volativity. Very profitable 99.9% of the time, 0.1% is the Little Kahuna. -g- Seems like a free lunch, but we all know there is no free lunch. In case of BK, all these profits and more are completely wiped out, only the BKs have not been allowed by the Fed for 20 years. I expect that's exactly the place the BK will come from - and I expect the BK to arrive during the SECOND market rout. The reason is, conditioned by the Fed, this crowd will short puts as volativity rises first time around, which is exactly what's happening now. If this does not work, and with all these guys positioned short puts hedged at higher VIX with delta-hedging, the VIX rises further, then BK will arrive. Note: 300B playing this game now, and they are probably 100x leveraged. But, the really big game is credit derivatives, which mostly the big boyz play. Rising defaults will be the real reason for the meltdown. And, defaults are on the rise, dramatically so. That is sure affecting the $500B credit derivative monster. I wonder what is the notional value of derivatives attached to, say, one $250K subprime mortgage. I bet it's at least 10x that.